Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-02-04
OUR CITY DEBT.
AN INTERESTING DISCUSSION con.
CORNING ITS VARIOUS PHASES.
Judge w. H. Beatty Gives Some
Pointed Truths-Who Are the
Friends of the City?

evening had under consideration Senator
Dray's bill amending the statutes approved
March 25, 1872, providing for the redemp-
ton of the funded Indebtedness of the city
of Sacramento As this is a measure OF
considerable local importance, the atten-
dance of citizens was quite large, among
whom were merchants, members of the
Board of Trade, prominent attorneys and
city officials. Senator Clunie, Chairman OF
the committee, invited the author of the
bill to address the assemblage. Mr.. Dray
came forward and said he was engaged in
committee work elsewhere and introduced
Judge W. H. Beatty, whom he said was an
advocate of the measure and appeared in
behalf of those who desired its passage.
Judge Beatty said that the advocates and
opponents of this bill in their arguments
had covered so wide a field that it would
be necessary to give chronological sketch
of the whole subject matter. He saw in
the room opponents of the measure, and he
desired them, at any time he made a mis-
representation of facts, to correct him as he
went along.
Mr.. anderson here interrupted by say
lug ue WUulu ike HrSl W ulSCuSS Tie COH-
stitutionality of the measure. If he could
satisfy the committee, as he believed he
could, that the proposed measure was I'M
constitutional, then it would be unneces-
sary TO go into the minor details as to the
merits of the bill.
Judge Beatty said the bill had been con-
sidered by the Judiciary Committee of the
Assembly. They ascertained that points
were involved that as yet had not been
adiudicated in the Courts. They referred
it to the Committee on Municipal Corpora
tons for hearing of the facts and recon-
mended, if such measure was needed, to
pass it, and let its constitutionality be de-
cided in the proper Courts. Enacting the
law could do no harm. If it is unconstitu-
tional it could be of no service, and the OPP
position on that score was without weight
Prior to 1858 this city was deeply in
volved. 1t had floating debt of 81 100000
That year the old Charter was abolished
and the Consolidation Act, consolidating
the city and county, passed. The city au-
thorized the issuance of 81 100000 thirty
year bonds, at per cent with interest
bearing coupons attached. OF this amount,
81 $40 600 was issued payable in 1888, 1898,
1898 and 1903. The same bill provided for
sinking and interest fund, and for two or
three years the interest was paid as fast as
it matured. In the winter of 1S61.62 came
the memorable and disastrous floods The
levees were broken and washed away and
the city almost obliterated. The only rail-
road then running to this city-the Sacra-
mento Valley-changed its terminus to
Freeport property values deprecated
to almost nothing, the future of the city
was ruined, no one had faith in its stabii-
ity, and as consequence, under this de-
I. Il L.
town, those bonds deprecated until they
sold as low -, Is and IS cents ON the dol
lar. When, in a short time afterwards, the
town began to recuperate, the bonds began
to appreciate. The amount paid into this
sinking and interest fund was only about
half the amount that fell due, so that the
city was going into arrears on interest an
nually about $4,000 In 1872 we find that
the amount Of interest due was 100000,
and the principal 81, 100000 That being the
case, many plans were suggested TO get the
city out of the difficulty, some method by
which the debt in time could be extin-
guished In 1862 an Act containing an
annuity provision was passed in 1863 it
was continued. In 1864 an Act was passed
levying special tax for sinking fund for
the purchase of bonds by Trustees, of not
over so cents on 500. Six special laws,
NtIt
passed from 1862 to 1866 At that time
bonds were ruling from 10 to 20 cents
These Acts all fell still-born. Never was
there dollar of tax levied under any of
them.
In the year 1872 the debt had largely ac-
cumulated, and going behind on interest at
the rate of 1900 per annum, the princi-
pal not being due. In that year an Act
was passed providing for the levy of tax,
not less than 10 cents nor more than 50 on
each 800, to create fund to be placed in
the hands of Trustees to be known as the
Funded Debt Commissioners, who were to
go into the market and buy up the indebt-
edness by paying not more than So cents
for the bonds and past due coupons
hold them until they became due, reinvest,
and buy in the name of the Trustees
for the benefit of the city. A Commission
was thus created to whom was given the
proceeds of an extra special tax. This
Commission bought its bonds and past due
coupons, held them until they became
payable, drew the money, used it for the
purchase of others, and in this way pro-
ceeded to gather in this outstanding indebt-
edness. 1t was supposed that by such
course in about eleven years they would
extingaish the debt. However, they
were not permitted to pursue this
wise financial course uninterruptedlv-
Some six years ago the city got into unne-
cessary litigation, the funds were tied up,
and for the time the efficiency of this Com
mission was destroyed. In nine years they
received from taxes, etc, S2120S0 20.
With that they bought for S1560O0, $47S,-
200 of the bonds, also $450,000 past due
coupons-in fact more than one-third of
the debt of the city, which at that time in
round numbers was something over 81
100000, and hold it to-day in trust for the
city.
in 1881, the last year the Commission was
allowed to operate, the city got into
litigation by undertaking to repudiate its
debt, claiming that coupons four years past
due were invalid. The city was mandam-
used by the bond-holders. Others less than
four years due also brought suit, and, in
consequence, the Treasurer could pay
neither. For five years the money,
some 100000 or 100000, accumulated in
the Treasury, where it remained until the
Court compelled its payment. OF that
payment the Funded Debt Commission
received S140,000 on the coupons they
held. With that amount they went
out and brought what they could get
Under the existing statute the Commits
sioners are restricted TO the purchase of
bonds at So cents or under, past due
coupons, or Sacramento County bonds
The city bonds are worth more than So
cents. The coupons are held at such fig
ure as not to be a profitable investment,
and Sacramento county bonds are held by
individuals, and not in the market. Some
years ago, bondholders became uneasy
cut their coupons off. sold them and
Daniel Meyer, Sam. Davis and a few specu-
lators bought them and are holding for
big price. The Commission don't want
them. They want now to change that
statute so they can invest the money in
their hands, and that may come into their
hands. in other and better securities. Let
US enlarge the manner of investment.
The opposition seems to be opposed to
fighting these Shylocks. The object of
this bill is TO allow us to invest so as to
make something for the city, and money
thus diverted will compel these Shylocks,
many of whom purchased their bonds at
from fifteen to twenty cents on the dollar
and who are now demanding the last
pound of flesh, to come to better terms.
| appear before you in behalf of the
Funded Debt Commissioners and the Sac
ramento Board OF Trade.
In speaking of the merits OF this BILL
Judge McKune, in pathetic appeal in the
columns of the Bee says he hopes this Leg
islature will let this cup pass from US"
In order TO show the falsity of the state
ment made by Judge MeKune, and his at
IN r,1isirt r11iSdr,ota and mis-